According to a market research report by MarketsandMarkets published earlier this year, the global Human Capital Management (HCM) market size is expected to grow 9.2% annually over the next five-year period. The industry is expected to grow from $14.50 billion in 2017 to $22.51 billion by 2022.

Workday’s Financials

Recently, SaaS-based HCM services provider Workday (NYSE: WDAY) announced its second quarter results that surpassed all market expectations. Revenues grew 40.6% over the year to $523 million, significantly ahead of the Street’s forecast of $507 million. EPS of $0.24 was also ahead of the market’s forecast of $0.15.

By segment, subscription revenues grew 42% to $434.5 million and professional services revenues grew 34% to $90.8 million.

During the quarter, Gartner announced that Workday was in the Leaders quadrant of the first-ever Magic Quadrant for Cloud Core Financial Management Suites for Midsize, Large, and Global Enterprises.

For the full year, Workday raised its outlook for subscription revenue to $1.75-$1.757 billion, compared with the earlier forecast of $1.705-$1.72 billion. The market was looking for subscription revenues of $1.717 billion for the year. For the current quarter, Workday forecast subscription revenues of $450-$452 million, versus the consensus of $435 million. Overall, for the year, Workday forecast revenues of $2.093-$2.1 billion, compared with the market forecast of $2.05 billion.

Workday’s Product Expansion

Last quarter, Workday made two important product enhancements. First, it announced a fixed fee, pre-configured application package for US-based medium enterprises. The move is in line with Workday’s focus on the medium-sized businesses. The application package will be delivered by Workday services and its deployment partners. The packages are based on the success of Workday’s existing deployments in the medium enterprise market. Workday believes that these will be a preferred offering as most companies prefer a single business partner for finance, payroll, and human resources. The packages will be made available to international markets soon.

Secondly, it has also announced its intention to enter the Platform-as-a-Service market by opening the Workday Cloud Platform to its customers’ partners, independent software vendors, and developers. The service will allow customers to be get access to a broader ecosystem of partners, ISVs, and developers with a Platform-as-a-Service (PaaS). Ultimately, the move will help build custom extensions and applications for customers’ business needs. This move opens up yet another competitive front against Salesforce.

Last month, Workday also announced the acquisition of the team behind a Redwood City, California-based startup called Pattern. Founded in 2015, Pattern has worked on managing customer relationships for salespeople. It has been backed by Felicis Ventures, SoftTech VC, First Round Capital, and various angel investors. Terms of the deal were not disclosed. This move, also, sets them up against Salesforce.

The market is also awaiting the release of Workday Prism Analytics, expected to be launched this fall. Prism is an analytic solution that has been developed on Amazon as part of Workday’s cloud services by leveraging the Platfora acquisition. Prism will allow organisations to pull data from a variety of sources into Workday for analysis. They will be able to develop a virtual data warehouse and users across different functions will gain the ability to access data stored in Workday and other SaaS-based products including ServiceNow and Salesforce.

Its stock is trading at $108.84 with a market capitalization of $22.4 billion. It has recovered from a 52-week low of $65.79 it had fallen to in December last year, and had touched a 52-week high of $111.45 earlier last month. The company plans to shift from the NYSE to Nasdaq later this month.

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